TaxTMI 
TaxTMI 
2026 (1) TMI 1313
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....uing notice u/s 148 of the Act. The assessment u/s 147/ 143(3) of the Act was framed vide order dated 02.07.2010, assessing the total income at Rs.1,33,770/-. 3.1. The Ld. PCIT upon perusal of the assessment records observed that the Ld. AO has not made proper enquiries and examination of evidences during the course of assessment proceedings to verify the genuineness and source of capital as well as identity and creditworthiness of the share holders which has rendered the assessment order as erroneous and prejudicial to the interest of the Revenue. Accordingly, the revisionary jurisdiction was invoked. The revisionary order u/s 263 of the Act was passed on 30.03.2013, setting aside the assessment and directing the Ld. AO to make the assessment afresh by taking into account all these directions and making inquiries as directed in the order passed u/s 263 of the Act. The Ld. AO accordingly issued notice u/s 142(1) of the Act along with questionnaire to the assessee asking to furnish certain details and documents in respect of share capital/ share premium. The Ld. AO observed from the balance sheet that the Ld. AO has raised Rs.1,78,52,900/- as share capital and Rs.19,61,27,500/- a....
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.... of share capital and share premium received by the appellant company in the financial year relevant to the assessment year under reference. Since all these grounds of appeal are interrelated and pertain to different aspects of a single issue, all of them are taken together for discussion and decision. 5.3.2. Section 68 of the Act places the initial onus on the assessee to satisfactorily explain the nature and source of any credit found in its books. In the case of private limited companies, especially those with closely held shareholding structures, the requirement extends to establishing: * The identity of the share applicant; * The creditworthiness of the share applicant, and * The genuineness of the transaction The jurisprudence evolved over years clearly lays down that mere submission of certain documents like PAN, bank statement, or ITR is not conclusive proof. The Hon'ble Delhi High Court in the case of CIT v. Nova Promoters and Finlease (P) Ltd. (342 ITR 169) held that the existence of a company on paper does not absolve the assessee from further proving the genuineness of the transaction and the creditworthiness of the inves....
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....folio (supra) and Devangi Dhirajlal Shah v. ITO (ITA No. 1662/Mum/2014). 5.3.6. The appellant's reliance on the judgment of the Hon'ble Supreme Court in CIT v. Lovely Exports Pvt. Ltd. (216 CTR 195) is misplaced. That decision held that where the assessee furnishes names and addresses of the share applicants, the Revenue is free to proceed against the shareholders under section 69. However, in the present case, the AO attempted to verify the identity and creditworthiness of the share applicants and received no cooperation. Therefore, the principle laid down in Nova Promoters and NR Portfolio-which qualify the ratio of Lovely Exports -would prevail. 5.3.7. The AO rightly noted that while some documents were filed, they were inadequate to establish real financial strength or creditworthiness. Most bank statements furnished were merely transactional and limited to the specific credit entry, and not for the entire financial year. This effectively made it impossible to assess whether the funds were genuinely available with the investor companies. The Hon'ble Supreme Court in CIT v. P. Mohankala (291 ITR 278) observed that where the explanation offered by th....
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....this improbability with cogent evidence. 5.3.12. In view of the facts and legal position discussed above, I hold that the AO rightly made the addition of Rs. 21,39,80,400/- under section 68 of the Act. The appellant failed to discharge its onus to prove the creditworthiness of the share applicants and the genuineness of the transactions. The documents furnished were superficial and not corroborated by third-party confirmations or physical verification The conduct of the appellant, particularly the failure to produce key persons and the evasive approach in complying with statutory notices, further substantiates the conclusion drawn by the AO. Accordingly, the addition of Rs. 21,39,80,400/- made by the AO is upheld and the ground no. 1, 2 and 3 of the appeal are dismissed and not allowed." 4.1. The Ld. Authorised Representative vehemently submitted before us that the order passed by the Ld. CIT (A) upholding the order of the Ld. AO and confirming the disallowance is totally wrong and against the facts on record. The Ld. Authorised Representative argued that during the course of assessment proceedings the assessee has submitted all the documents comprising confirmation let....
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....wing decisions:- i. PCIT Vs. Goodview Marketing P Ltd. in ITAT/114/2025, GA/2/2025 dated 03.09.2025 ii. PCIT Vs. K/s Kunjal Synergies Private Limited in ITAT/42/2025, IA No.GA/2/2025 vide order dated 01.12.2025 iii. PCIT Vs. M/s Jealous Commercial Private Limited in ITAT/138/2025, IA No. GA/2/2025 vide order dated 28.10.2025 iv. PCIT Vs. Rajshree Integrated Cold Chain Pvt. ltd. in ITAT/286/2024, IA No.GA/2/2024 vide order dated 17th July, 2025. v. PCIT Vs. True Man Consultants Pvt. Ltd. in ITAT/203/2024, IA No.GA/1/2024, vide order dated 25.04.2025. vi. PCIT Vs. Atlantic Dealers Pvt. ltd. in ITAT/41/2024, IA No.GA/2/2024 vide order dated 03.05.2024. 4.3. The Ld. Authorised Representative therefore prayed that the order of Ld. CIT (A) may be set aside and the Ld. AO may be directed to delete the addition. 4.4. The Ld. DR on the other had relied heavily on the orders of the authorities below by submitting that the directors of the assessee company as well as the share subscribers did not appear personally in compliance to the summons issued u/s 131 of the Act. Therefore, the necessary verification could not be carried out an....